Warburg Pincus backs Chinese car park operator

Sunsea already manages some of Red Star's parking bays and is said to have delivered a significant revenue increase during the operation period. As part of the deal, Hong Kong-listed Red Star has granted Sunsea operating rights to all of its 300,000 parking spaces in over 200 furniture shopping malls across 150 cities.

Founded in 2006, Sunsea claims to be the only car park management company with national presence. It manages around 200,000 parking spaces in 40 cities for real estate developers and property managers such as COFCO, Wanda Group, Sino-Ocean, China Resources, and Jones Lang Lasalle.

In 2015, Hong Kong-based private equity firm LimeTree Capital acquired an 80% stake in Sunsea in a deal worth $42 million. It is understood that Sunsea subsequently bought back LimeTree's position. 

While private car ownership has been growing at over 10% per year in China, parking space availability has not kept up, according to Joseph Gagnon, managing director and head of real estate in Asia at Warburg Pincus. For example, the ratio of car parking spaces to cars in Beijing is only one-third the level of Hong Kong.

“Parking assets will become the next most attractive real estate asset class because it generates steady cash revenue with a potential of further financing options such as REITs [real estate investment trusts],” Liang Yan, chairman of Sunsea, said in a statement.

Warburg Pincus has invested over $3 billion in more than 20 Chinese real estate-related companies, including ESR, Mofang Apartments, D&J China, 7 Days Inn, Sunshine 100 and Guangzhou R&F. The GP first backed Red Star in 2007, with follow-on investments in 2008 and 2010. The company raised $931 million in a Hong Kong IPO in 2015.

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• Topics
• Greater China
• Real estate
• Expansion
• China
• Warburg Pincus Asia
• Real estate
• Growth capital